Container volumes handled at major ports improve during Dec 2017

Container volumes
(TEU) at major ports grew by 14 per cent YoY for the month of December 2017 and
7 per cent YoY for Year that had ended last month for JNPT

JNPT continued its
growth momentum with 10 per cent YoY volume growth in Decí17 and of 6 per cent
YoY for the first half of January 2018, respectively aided by portís improving
operating efficiency leading to faster ship turnaround time and lower dwell
time.

The port continues
to focus on increasing DPD volumes (~36 per cent in Decí17 against the target
of 40 per cent over-the-road imports by Marí18) despite unresolved issue of
pricing parity amongst terminal operators. However, port infrastructure
limitations has led to increase in DPD containers delivered via CFS (61 per
cent) of total DPD volumes in Decí17 vs 15 per cent in Febí17) resulting in
higher volumes for JNPT CFS operators like (Allcargo Logistics, Gateway
Distriparks and Navkar Corporation).

Container Volumes
at the Chennai port for the month came in at ~1.3 lakh TEUs, 19 per cent Year
on Year growth, on a low base (Cyclone Vardha impacted port operations in
Decí16). The competition near the port is expected to further intensify with
Adaniís new Container Terminal at Kamarajar port, Ennore (Phase I with capacity
of 0.8mn TEU commenced operations this month). The terminal will have an
overall capacity of 1.4mn TEU thereby increasing south ports(Chennai,
Kattupalli, Krishnapatnam and Ennore) over all container handling capacity to
~5.4mn TEUs within a stretch of 200 KM coastline. Sadly hardly fifty per cent
of their capacity is used due to lack of railway infrastructure from North
India.

Visakhapatnam Port
reported 21 per cent Year on Year growth for the month driven by increase in
Nepal bound containers while Cochin port reported volume growth of 10 per cent
YoY on the back of increasing port efficiency. Kolkata and Haldia portsv
reported flat growth in throughput for the month.

Shipping spot rates
for FEU fell 24 per cent from Aug-Decí17 as rates correct on demand-supply
mismatch. However, first week of Janí18 reported 16 per cent MoM increase
before Chinese New Year as we expect container-shipping freight rates to
increase driven by continued demand strength even as a supply glut continues to
mar a stronger rate recovery.

Rail
Freight:

EXIM container volume
grew ~13 per cent Year on Year to 3.7
Million tonnes in Decí17 while lead distance declined 5 per cent YoY to 820
KMS. The drop in lead distance was on account of shift of hinterland volumes
from JNPT to Mundra and Pipava ports in Gujarat. This means that industrial
centers in north and Central India are shifting dispatch of cargo from JNPT to
the Ports in Gujarat.

JNPT is working to
more than 100 per cent capacity and the shipping ministry will soon be
commissioning a major container terminal in the port. But the ports in the East
coast from Visakhapatnam to Chennai, especially state owned ones are working
hardly 50 per cent of their capacity since the railways especially CONCOR have
denied connectivity infrastructure to the East coast ports from Industrial Centers
in North and Central India. There is no dedicated freight planned to link North
with South and with the result freight have to share the passenger railway
lines.

Domestic container
volumes witnessed ~18 per cent YoY growth at 1.0mn tons in Decí17. The average
lead distance remained flat at 1,349 KMS.

Road
freight:

Freight rates
declined ~3.0-4.0 per cent on a month to month basis in December 2017. This
comes on the heels of a ~4 per cent m-o-m increase in freight rates in November
2017. Industry sources indicate that the only sectors that showed strength in
demand for freight movement by road were steel and cement, while most other
pockets including agri and SME demand were weak.